Transfer of 40,48,200 shares declared non-est, remaining shares to be released. Respondent to collect 3.5 crores.

The transfer of 40,48,200 shares by respondent No.1 is declared non-est. The remaining pledged shares are to be released to the registered owners. Respondent No.1 is directed to collect the principal amount of Rs. 3.5 crores deposited with the Registrar General, and any balance amount is to be refunded to the applicant. The application CA No.1540/2013 is allowed in these terms.

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Issues Involved:
1. Validity of the sale of pledged shares.
2. Compliance with Section 176 of the Indian Contract Act.
3. Effect of interim orders and judgments from various courts.
4. Impact of the sanctioned scheme of compromise on the sale of shares.
5. Jurisdiction and finality of judgments from different courts.
6. Status and rights of the alleged purchasers of the shares.

Detailed Analysis:

1. Validity of the Sale of Pledged Shares:
The applicant contended that the sale of 55,60,000 pledged shares by respondent No.1 was non-est and void ab initio. The shares were pledged against a loan of Rs. 5 crores. The respondent No.1 sold these shares without proper authorization and in violation of court orders. The alleged sale was also challenged on the grounds of forged transfer deeds and lack of compliance with statutory requirements.

2. Compliance with Section 176 of the Indian Contract Act:
Section 176 requires reasonable notice to be given to the pawnor before selling the pledged goods. The respondent No.1 claimed to have sent a notice on 07.12.1998, but the authenticity and service of this notice were doubted by the Company Law Board, which found the notice to be inadequate and not properly served. The respondent No.1 failed to provide a reasonable opportunity for the applicant to redeem the shares, rendering the sale invalid.

3. Effect of Interim Orders and Judgments from Various Courts:
The sale of the pledged shares was in violation of an interim restraint order dated 23.04.1997 by the Kolkata High Court, which restrained the respondents from dealing with the shares. The Division Bench of the Kolkata High Court, in its judgment dated 11.07.2005, did not validate the sale but only addressed the consequential reliefs based on the premise that the sale had occurred. The Supreme Court stayed the transfer of shares on 12.09.2005, and the issue of the sale's validity was left open for determination by the Delhi High Court.

4. Impact of the Sanctioned Scheme of Compromise on the Sale of Shares:
The scheme of compromise sanctioned on 15.07.2005 by the Delhi High Court categorized respondent No.1 as an unsecured creditor and entitled it to only 70% of the principal amount advanced. The scheme required the return of the pledged shares to the court. The Division Bench of the Delhi High Court, in its judgment dated 09.11.2012, upheld the scheme and left the issue of the alleged sale and receipt of consideration open for determination by the Company Judge.

5. Jurisdiction and Finality of Judgments from Different Courts:
The Division Bench of the Kolkata High Court's judgment dated 11.07.2005 was challenged in the Supreme Court, which stayed the transfer of shares and directed the Delhi High Court to decide the issue of transfer. The Single Judge of the Kolkata High Court, on 23.11.2011, kept the issue of any right arising out of non-registration or subsequent registration of the shares open. The Division Bench of the Delhi High Court, in its judgment dated 09.11.2012, also left the issue open for determination by the Company Judge.

6. Status and Rights of the Alleged Purchasers of the Shares:
The alleged purchasers of the shares never initiated any proceedings to assert their rights. The transfer of shares was not completed as the shares were not registered in the company's register. The Company Law Board found the transfer deeds to be forged and fabricated, and this finding attained finality as the appeal against it was dismissed.

Conclusion:
The transfer of 40,48,200 shares by respondent No.1 is declared non-est. The remaining pledged shares are to be released to the registered owners. Respondent No.1 is directed to collect the principal amount of Rs. 3.5 crores deposited with the Registrar General, and any balance amount is to be refunded to the applicant. The application CA No.1540/2013 is allowed in these terms.

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